Lifesight Pension - any good?

EAB2

https://forums.moneysavingexpert.com/discussion/comment/82113033#Comment_82113033

So they crystallised £5,000 and sent you an amount with some tax deducted on the £3,750 taxable amount I assume?

£5,000 a month/£60k a year is what we expect to live on in early retirement, but I don't want to be paying any tax on that. So the plan is that Mrs EAB and I each take £30,000 in income, both using our £12,570 income tax allowance and drawing £17,430 each from non-taxable sources, either via FAD or from ISAs.

I understand that if using FAD we'd build up a taxable crystallised pot, but we are unlikely to need quite so much when we are not travelling the world in our 70s and beyond so any tax then will be minimal.

But if Lifesight only does UFPLS or FAD, not a combination, that might put a spanner in the works, because I will likely need the majority of my tax free cash for a property purchase (having carelessly lost my own house in a divorce).

As the Lifesight guide says…
Tax-free lump sums

If you are yet to take advantage of your entitlement to receive 25% of your fund value tax-free, your options are as follows:

1. You can choose to take 25% of each withdrawal you make tax-free, paying tax on the remaining 75%. This will be the default unless you tell the LifeSight Team otherwise.

2. You can choose to take your 25% tax-free entitlement as a lump sum (up to a limit of £268,275) at any time before you start making withdrawals by requesting this from the LifeSight team. Please note that you can only do this once and after that your remaining funds will be taxed as income.

…so if I take the tax-free amount at the start they will crystallise the lot and I'll have to pay tax on anything over £12,570. But if I don't take any tax free money at the start it's UFPLS and each payment is made 25% tax free.

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/82113090#Comment_82113090

In general you will find the SIPP providers are more flexible for withdrawal options and you can chop and change, take out only part of the tax free cash etc. So to name some names; AJ Bell; Interactive Investor; Fidelity and Hargreaves Lansdown are the four biggest players. Plus there is Vanguard, who are not strictly a SIPP provider, but similar.

The more traditional providers and the newer low cost recent entrants in the markets, tend to have more restrictions.

GenX0212

https://forums.moneysavingexpert.com/discussion/comment/82113090#Comment_82113090

Thats the way I read it, you can take your intial 25% one-off lump sum tax free and crystalise the whole pot, everything withdrawn after is taxable OR you can use UFPLS for all your withdrawals.

It doesnt appear that they operate seperate crystalised/non-crystalised pots which I think is what you are hoping to achieve.

EAB2

https://forums.moneysavingexpert.com/discussion/comment/82113295#Comment_82113295

https://forums.moneysavingexpert.com/discussion/comment/82113295#Comment_82113295

I had a chat with Vanguard who have my ISA money.

They apparently do UFPLS and FAD. They charge £375 platform fee across all your pension, ISA and other investments, plus the fund management charge which is about 0.07% (£70 per £100,000) on the S&P UCITS ETF I think. Seems reasonable compared to AJ Bell and others

The chap said it can take absolutely weeks to get anything from WTW though…

GenX0212

https://forums.moneysavingexpert.com/discussion/comment/82113356#Comment_82113356

Isn't that fund 100% USA though? Dont you need some diversification?

EAB2

https://forums.moneysavingexpert.com/discussion/comment/82113384#Comment_82113384

Absolutely. The 'rest of the developed world' fund is 0.12% charge, so blending them would immediately get you some diversification

EAB2

https://forums.moneysavingexpert.com/discussion/comment/81286759#Comment_81286759

I'm interested to know about the 'lower' AJB charges.

As far as I can see they would be £875 a year for £500k invested, PLUS dealing charges. Annual fee at Lifesight for the basic equity fund is £500 a year all in.

QrizB

I'm interested to know about the 'lower' AJB charges.

As far as I can see they would be £875 a year for £500k invested, PLUS dealing charges. Annual fee at Lifesight for the basic equity fund is £500 a year all in.

Noting that you're replying to a post from 18 months ago and charging may have changed since then, at that time the OP was paying "around £90 a month" (£1k for the year) on a £500k.

EAB2

Sorry to relight this one, but I couldn't tell from my conversation with the Lifesight phone line - can you do Phased Drawdown with them?

For example, if I have a £600k DC pot and need £100k of the available £150k tax free cash to pay off the mortgage. Can I crystallise £400k, take my £100k tax free and leave £200k uncrystallised for later use either as FAD or UFPLS?

GenX0212

https://forums.moneysavingexpert.com/discussion/comment/82119740#Comment_82119740

I'm not sure whether you could do that without incurring an immediate Additonal Rate tax charge on £300k of the £400k crystallised.

I would suggest you contact LifeSight by email, explain what you want to do and ask them to explictly confirm the drawdown options and tax treatment.